And now, survival
Load-shedding is wreaking havoc on shareholder returns for all retailers — though Shoprite is still cleaning up
● Shoprite, Africa’s biggest retailer, has chalked up 46 straight months of growth in market share and is considering more acquisitions even as it bleeds R3m a day on diesel bills.
It spent a staggering R560m for the 26 weeks ended December 2022 money that could have gone into the business or to shareholders.
“We’re not alone in this, but what a lot of people miss is that the entire value chain is bearing the brunt of these costs,” CEO Pieter Engelbrecht said at the results presentation.
“It’s not only the diesel costs, that’s one component of it. There are times when farmers can’t irrigate because they don’t have power. Then there’s the cost of generators.”
Other costs include more food waste and the need for additional security.
Nonetheless, the supermarket chain is keen to expand further within South Africa, as opposed to elsewhere.
It’s already transformed the 94 Cambridge Food and Rhino Cash & Carry stores it bought from Walmart-owned Massmart. The acquisition brought 4,480 employees into the Shoprite fold.
It’s not as if it needs acquisitions, however. The group reported double-digit same-store growth, outstripping rivals and boosting market share by R3.9bn. Visits to stores, it said, rose 12.9% in the period.
Overall, group sales were up 17.5% for the first half, diluted headline earnings grew 10.2% to 577.5c a share and Shoprite lifted the dividend 6.4% to R2.48 a share.
Sales growth for the last quarter was better than double that of its rivals, Engelbrecht tells the FM.
Checkers, especially, is closing the gap on Pick n Pay and Woolworths and contributes almost R34bn to group sales, while Shoprite contributes R44bn.
Private labels including Checkers’s Ritebrand and Forage and Feast, and Usave’s Ubrand are key to the group’s performance, accounting for about 20% of sales other than liquor, a segment in which shoppers are more brand loyal. In the period, 93% of customers bought at least one private-label product.
No wonder Shoprite has taken Pick n Pay to court over what it deems a copyright infringement of Forage and Feast. Pick n Pay’s Crafted Collection private label has similar-looking branding.
“We have spent an enormous amount of effort and development to create a superior product and for it to be copied to that level, for us it’ sa problem,” Engelbrecht says. “All we want is copyright